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Air France-KLM intends to sell part of the equity of Air France Engineering & Maintenance to Apollo Global Management, a New York-based asset management company. The negotiations are for a number of spare engines that are owned by the AF affiliate. Air France-KLM in talks with Apollo over engine sale deal.
The airline group said on May 20 that it had entered exclusive discussions with Apollo about a €500 million equity investment. This is part of the plan of its equity strengthening measures that were announced in February at the presentation of its 2021 results. Back then, the airline said that it planned “additional equity strengthening measures, including a potential ongoing project to refinance assets for an amount up to 500 million euros, through private perpetual bonds classified as equity.”
In a media statement, the group says: “The proceeds of the transaction would enable Air France-KLM and Air France to partially redeem the French State perpetual bonds, in accordance with the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak”, as well as facilitate the financing of future spare engine acquisitions under Air France’s fleet renewal program.”
Air France-KLM stresses that the potential investment is for the spare engine only. “The structure will incur no change on operational and social aspects. Therefore, there will be no change in the way to use the spare engines and no impact on Air France or Air France-KLM employee’s contracts.”
Apollo is no stranger in the aviation sector. It managed some $500 million in aviation-related assets in March 2021, including the financing of 360 aircraft and sixty engines. With PK AirFinance and Merx Aviation, it has two lease platforms. Merx services the MAPS asset-backed securitization platform that has a portfolio of eighteen Airbus and Boeing narrowbodies worth some $620 million. In May 2021, Merx completed a sale and leaseback transaction with Air France for two Boeing 777Fs.
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